The startup had started with all the makings for a Silicon Valley success story. Its cofounders were rivals turned friends who raised a seed round of more than $3 million after passing through the prestigious Y Combinator startup program in 2014. Boostable’s product, which handled advertising for sellers on online marketplaces in exchange for a share of the extra sales they'd generate, scored major partners like Eventbrite and Shopify and was making money at a steady clip. But as ad tech startups began struggling on the public markets and in fundraising last year, Boostable got caught in between.. Existing investors continued to raise its revenue targets to unsustainable goals. Prospective new investors would only offer money at terms that would large wipe out its employees. Cofounder Alex Chang quietly put up the company for sale.

In June, Boostable found its ideal buyer in an unlikely place: a new holding company specializing in resuscitating startups called Metric Collective. Founded by two former bankers and with offices in New York and Los Angeles, Metric Collective specializes in taking over companies much like Boostable: startups or small businesses that have gained some traction and have real sales, but whose founders decide they want to move on. Founders could have a new idea they like more or simply feel burn out after the grind of getting a business off the ground.

With a centralized team to run operations and the back-end of each business, Metric Collective bets that it can scale each company faster and cheaper—without the pressure of venture capital. “They don’t have some of the structural limitations that a VC-backed company does,” says Boostable cofounder Alex Chang. “They can go after the path of building a really successful, sustainable company versus having to go for the monster outcome.”

Metric Collective cofounder Sandeep Kella knows that joining his company isn’t a startups first choice. Selling to Metric Collective can get a price in the millions. For companies like Boostable, which raised almost $5 million, investors simply get some money back. But because Metric Collective allows the sellers to keep a small piece, everyone involved gets the best chance for a future payday, Kella argues. “It’s a bit more than just saying it’s better than nothing,” Kella says. “It might not be the exact outcome they would’ve preferred, but it gives them a better chance to see a return.”

The pitch is getting easier for Metric Collective as it becomes better known and investors turn the screws on startups that raised money at optimistic projections that are proving tough to meet in an unsteady market. In just over a year Metric Collective’s grown from two portfolio companies and a staff of four to half a dozen companies and more than 20 people today, with a portfolio value that its founders say would fetch north of $50 million. Unlike the startups it buys, however, that valuation is based on real sales. The names in its portfolio aren’t the sexiest— Dandelion, Small Business Post and Vestable are three—but Metric is self-funded and profitable, with each company carrying its own weight in sales after Metric’s triage team goes to work.

Metric Collective’s operators in chief are finance veterans turned entrepreneurs. Kella met cofounder Kayvon Bina when he was interviewing unsuccessfully for a job at Goldman Sachs. The two kept in touch during their finance careers, and when Bina read a book about the franchise retail model, he asked Kella why the idea couldn’t work with digital startups. The duo quit their jobs to acquire their first business, franchise listing and info site FranchiseHelp, in 2010. The first year, the company brought in no real revenue, most of that time wasted as the founders dithered on a flashy new website for their business. But Kella and Bina learned from their mistakes while taking no salary for three years until the model took off. “The hard part was paying rent and groceries after the deal,” says Bina, who moved in with roommates to cut costs while Kella convinced his then-pregnant wife that the work would pay off.

FranchiseHelp is now worth 100 times what the pair paid for it, they say. And it taught Metric Collective a playbook to start replicating with other businesses. “We didn’t have to sell,” says Dan Goikhman, who sold Dandelion to Metric Collective in order to pursue a new idea he liked more called Unreel. Dandelion had raised money from early investors and built out a promising business, Goikhman says, but after multiple startups, he knew its small-business ads weren’t where he wanted to spend the next few years of his career. Dandelion’s investors wanted to keep going. In the sale, they got a choice whether to keep a stake. “It’s been a lot of fun,” Goikhman adds. “I feel like an investor in this business now, a shareholder where I want to see it succeed.”

Metric Collective isn’t the only company looking to capitalize on situations like Chang’s at Boostable or Goikhman’s at Dandelion. The startup holding company idea has worked well with digital brands at Barry Diller’s IAC and in startup “studios” or collectives such as Betaworks and Uber cofounder Garrett Camp’s Expa. Boutique private equity firms also take a similar approach and can more easily ink deals for tens of millions of dollars. At DRD Capital in San Francisco, Dennis DeAndre buys halves of companies to keep founders involved, installing his own managers to help each reach profitability. “I know it sounds old school, but you get more control over the outcome than venture capital,” DeAndre says. “You expect 9 in 10 to succeed, whereas in venture it’s 9 out of 10 fail.” DeAndre expects to send deal flow to Metric Collective when founders want to more completely cash out. “If they’re choosy in what they buy and they’re truly great operators, they should be a home run.”

One risk for Metric Collective is to over-extend into areas of business where its team can’t leverage their operational experience to improve upon what the startup’s employees were already doing. In recognition of that, Kella and Bina decided this year to focus their efforts for now on companies that sell to small businesses and franchises. They’ve already unloaded a business that aggregated data on property listings and are getting out of another that doesn’t fit that framework, an online linens marketplace.Metric Collective will also have to prove itself to the network-driven, sometimes closed ranks of Silicon Valley and its venture capital community. For venture capital firms with billions to invest, selling off a business at a modest return could seem defeatist or against the culture of “10x [returns] or bust.” Metric Collective picked Los Angeles for its West Coast base in part for that reason, sensing that the entrepreneurial community there might produce more solid companies with founders willing to sell and unencumbered by major investment. “These guys will be very founder driven,” says friend Ravi Gupta, the COO and CFO at
Instacart. “One thing that Silicon Valley and its entrepreneurs have a huge premium on is smarts.”

By acquiring Boostable with its Y Combinator background, Kella and Bina may have already broken through to tech’s geographic stronghold. “People are starting to view us as a landing spot for companies,” says Kella. It’s a drop zone for a soft landing with plenty of room: for Metric Collective’s founders to achieve their own end goals, they’ll have to build a portfolio of 100 companies.

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